New Law Aims to Limit Anti-Money Laundering Compliance Burdens for Money Transmitters

On August 8, 2014, President Obama signed into law a bipartisan measure, The Money Remittances Improvement Act of 2014, that allows the Secretary of the Treasury to rely on state supervisory agency examinations covering compliance with federal anti-money laundering requirements for money services businesses. The law is intended to ease anti-money laundering (AML) compliance burdens on state-licensed money transmitters and their banks.

The Law Permits Treasury to Rely on State AML Examination Data. The law has the potential to alleviate inefficiencies for money transmitters and banks doing business with money transmitters arising from duplicative AML exam inquiries and reporting requirements from federal and state regulators in two main areas: 1) monetary instrument transaction reporting; and 2) ownership and control reporting. Since the law permits, but does not require, the Treasury to rely on state examinations assessing compliance with federal AML requirements, its long-term utility depends on the Treasury’s future activities. The passage of the law and its bipartisan backing implicitly encourages state regulators to share AML examination data with the Treasury, and for the data to be accepted and relied upon by the Treasury. The Treasury may issue rules that further clarify the scope and details of its reliance on state AML examination reports.

Ensuring Legitimate International Money Transfers Can Continue. The law’s sponsors in the U.S. House of Representatives, Rep. Keith Ellison (D-MN) and Rep. Erik Paulsen (R-MN), introduced the bill to ensure that constituents who send money to family abroad have access to affordable money transmissions services. After two women in Minnesota were found guilty of sending money to the Somalian terrorist group al-Shabab through international money transmitters, some large banks cut ties with international money transmitters, which in turn made it increasingly difficult for consumers to make legitimate international money transfers. This law is intended to provide some comfort to banks that state-licensed money transmitters are meeting their AML compliance obligations. This represents one of many recent efforts to enhance information sharing between federal and state regulatory agencies.

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